December 3, 2016 9:00 am JST

Economic inequality at heart of disillusion with Park

South Korean president's flip-flop from workers to 'chaebol' doomed her

KENICHI YAMADA, Nikkei staff writer

SEOUL -- South Koreans who are clamoring for President Park Geun-hye's resignation are not just infuriated about a corruption and influence-peddling scandal that has engulfed her administration, they are also deeply disillusioned by Park's failure to deliver on her campaign promise to redress economic inequality.

Like many other ordinary people in the country, a 30-something living in Seoul is struggling to make a stable and decent living. "I can earn some money in the summer from my air-conditioning equipment work," said the man. "But my income falls sharply in winter."

After quitting his job at an Information Technology company three years ago, he has been working as a nonregular employee, hopping from one unstable job to the next. 

In July and August, he earns more than 3 million won ($2,570) per month, but his average monthly income barely reaches 1.49 million won, the average for all nonregular workers. "I want a stable job as a permanent employee," he said.

The already wide income gap between regular and nonregular employees is getting bigger. 

The average monthly salary for full-time employees has grown by 47% over the past 10 years, from 1.9 million won to 2.79 million. In the meantime, the average monthly pay of nonpermanent workers has increased by only 25%.

Income disparity also exists based on company size. Nonregular workers at large companies earn 36% less than their full-time colleagues. But the pay for permanent and nonregular positions at small and midsize companies is 48% and 66% smaller, respectively, than that for full-time posts at large companies.

Dwindling hope

The latest Gallup Korea survey found that Park's approval rating among people aged 10-39 had fallen to zero.

Resentment directed at the embattled president is especially strong among young South Koreans who are bitterly discontent with the status quo and deeply worried about their future. These young people constitute a large portion of the participants in the massive rallies demanding her departure that have been happening in recent weeks across the country.

The unemployment rate for people aged 15-29 rose to 12.5% in February, the highest reading since 1999, when employment statistics started being compiled under the current standards.

Some five years ago, the term "three-give-up generation" came into vogue. The expression refers to the phenomenon that many young people were so busy earning a living that they sacrificed love, marriage and children. 

But the list has gotten longer: it now includes a decent occupation, owning a home, having dreams and even hope. Welcome to the "seven-give-up generation."

Letdown

The public once believed that Park could eliminate economic disparities, said Chang Dal-joong, a professor emeritus at Seoul National University.

In her presidential campaign in 2012, Park called for "democratizing" the nation's economy. Despite being a candidate of the pro-business conservative camp, she pledged to reduce the nation's dependence for economic growth on chaebol, the country's powerful family-run business conglomerates. Her message appealed huge numbers of disgruntled South Koreans. 

However, the five key policy goals she announced immediately after taking office in February 2013 failed to include the economic democratization she promised. 

The won was appreciating at the time, putting a strain on export-dependent South Korean companies. 

Amid this unfavorable environment, the Park administration found it difficult to take steps that would undermine the competitiveness of large companies, the main engine of the country's economic growth. 

In an about-face, Park shifted to economic policies that capitalized on the power of the conglomerates -- the same companies that already dominate the economy. 

In 2014, her administration introduced a policy program designed to put corporate giants like Samsung Electronics and Hyundai Motor in charge of nurturing promising new businesses in 18 major cities designated as "creative economy innovation centers," including Seoul and Busan.

In January this year, her government announced administrative guidelines that allow companies to sack employees whose operational capabilities have been judged to be "extremely low." Employers will be able to shed jobs more easily than through dismissals done via conventional procedures.

Unsurprisingly, labor unions have denounced the measure as being too favorable to businesses.

Many experts say assistance from the conglomerates and labor laws reform are needed to promote economic growth and restructuring. 

But the country's economic-inequality problem remains unresolved. 

The sense of disillusion that pervades South Korean society is combining with people's anger over Park's shady relationship with an old friend and her dealings, generating a tide of public disgust that is driving massive demonstrations demanding the president's resignation. 

 

 

Asia300

Samsung Electronics Co., Ltd.

South Korea

Market(Ticker): KRX(005930)
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Telecommunications Equipment
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Asia300

Hyundai Motor Co., Ltd.

South Korea

Market(Ticker): KRX(005380)
Sector:
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Consumer Durables
Motor Vehicles
Market cap(USD): 35,954.8M
Shares: 285.47M

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